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Congratulations to Konstantinos Papadimitrakopoulos and Dimitris Gryparis, the former Globo executives whom Britain’s Financial Conduct Authority will no longer attempt to prosecute for fraud.
Globo was an Aim-quoted provider of mobile phone software that collapsed in 2015 after short seller Gabriel Grego and FT Alphaville revealed that claimed business partners and resellers had never heard of the company. One turned out to be a laptop repair shop in Mumbai.
The FCA announced late last week it has abandoned the criminal case following Greece’s refusal to extradite and the two men’s acquittal in local proceedings over similar allegations.
In an indication of post-Brexit international cooperation standards, the FCA said those acquittals occurred in May and November 2021:
We have only recently been able to confirm details of their acquittals in Greece.
November 2021 was the date when the FCA launched a UK civil legal action against the two men alleging market abuse and seeking compensation for UK investors.
The two men have defended the claim, and in November 2022 failed to have it struck out on the grounds that evidence acquired as part of a criminal case could not be used in civil proceedings. An FCA spokesperson said the civil case was ongoing, and couldn’t comment further. As of pixel time, law firms representing the men had not responded to requests for comment.
Papadimitrakopoulos is the windsurfing champion who founded the group. He sold more than half his stake shortly after an October 2015 interview with the Financial Times in which said he was “really surprised” by allegations that the company had fabricated sales, and that “the business exists, yes, of course it exists.”
Days later Globo announced that Papadimitrakopoulos had “brought to the attention of the Board certain matters regarding the falsification of data and the misrepresentation of the Company’s financial situation, and offered his resignation, as did Dimitris Gryparis the CFO of the Group.”
By then Grego’s New York hedge fund Quintessential Capital Management had accused Globo of “massively overstating its revenue and profit by generating fictitious sales invoices from shell companies [posing as] legitimate clients”.
Globo had raised £100mn from investors, and at its peak was valued at more than £300mn. At the time of its collapse, Globo was audited by Grant Thornton and claimed cash reserves of £104mn in various foreign subsidiaries.
According to the insolvency administrator’s report, the UK holding company failed with £180,000 cash in its bank accounts. A year later only £33,000 had been recovered, primarily from a VAT refund.
The Financial Reporting Council, which regulates auditors, in 2018 closed its investigation into Grant Thornton over its Globo audits without taking any action.
Further reading:
— PwC wins High Court battle over Quindell leak allegations (FT)
— SFO ends Quindell investigation after 6 years (Law Gazette)
— A beginner’s guide to accounting fraud (and how to get away with it) (FTAV)
Read the full article here